Telstar Communications is going to purchase an asset for $380,000 that will produce $180,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 1212. (This represents four years of depreciation based on the half-year convention.) The firm is in a 25 percent tax bracket.

Table 12-2 Depreciation Year 1: 0.333 Year 2: 0.445 Year 3: 0.148 Year 4: 0.074

Fill in the schedule below for the next four years.

	Year 1	Year 2	Year 3	Year 4
Earnings before depreciation and taxes
Depreciation
Earnings before taxes
Taxes
Earnings after taxes
Depreciation
Cash flow